Fair Work Ombudsman v Ansa Finance Pty Ltd
[2024] FedCFamC2G 160
•27 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Ansa Finance Pty Ltd [2024] FedCFamC2G 160
File number: MLG 1564 of 2022 Judgment of: JUDGE FORBES Date of judgment: 27 February 2024 Catchwords: FAIR WORK –failure to comply with compliance notice – where default judgment had been entered - civil penalties – relevance of similar prior conduct – relevance of employer’s conduct after contravention – whether cooperation real - serious contravention warrants penalties Legislation: Crimes Act 2009 (Cth) s 4AA
Fair Work Act 2009 (Cth) s 90, 99, 539, 545, 546, 547, 550, 716
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833
Fair Work Ombudsman v ANSA Finance Pty Ltd (No 2) [2024] FedCFamC2G 95
Fair Work Ombudsman v C &G Smith Enterprises [2023] FedCFamC2G 523
Division: Division 2 General Federal Law Number of paragraphs: 88 Date of hearing: 3 July 2023 Place: Melbourne Solicitor for the Applicant: HWL Ebsworth Lawyers Respondents: In person ORDERS
MLG 1564 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: ANSA FINANCE PTY LTD (ACN 138 153 296)
First Respondent
JOSHUA FUOCO
Second Respondent
ORDER MADE BY:
JUDGE FORBES
DATE OF ORDER:
27 FEBRUARY 2024
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the Fair Work Act 2009 (Cth):
(a)the First Respondent pay a pecuniary penalty of $24,975 to the Commonwealth for the contravention declared in Order 1 of the Orders made in these proceedings on 5 April 2023 (April Orders); and
(b)the Second Respondent pay a pecuniary penalty of $4,995 to the Commonwealth for the contravention declared in Order 2 of the April Orders.
2.Each of the First Respondent and the Second Respondent pay the penalties prescribed by Order 1 to the consolidated revenue of the Commonwealth within 28 days of the date of these orders.
3.The Applicant has liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE FORBES
INTRODUCTION
The Fair Work Ombudsman (the Ombudsman) seeks the imposition of penalties against the first respondent, Ansa Finance Pty Ltd (ACN 138 153 296) (Ansa Finance), and its company secretary and manager Mr Joshua Fuoco (Mr Fuoco) in respect of the first respondent’s failure to comply with a compliance notice issued on 4 February 2022 (the Compliance Notice) pursuant to section 716(2) of the Fair Work Act 2009 (Cth) (FW Act). A civil penalty is sought against Mr Fuoco by reason of his involvement, as an accessory, in the company’s contravention pursuant to section 550(1) of the FW Act.
Liability for Ansa Finance’s contravention and Mr Fuoco’s involvement has been established by way of a default judgment made by the Court on 5 April 2023. On that occasion, by reason of the respondents’ non-compliance with earlier Court orders[1] and their failure to attend the default judgement hearing[2], the Court made declarations and orders including:
[1] Rule 13.05(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (the Rules)
[2] Rule 13.06(1)(e) of the Rules
(1)declarations that:
(a)Ansa Finance contravened section 716(5) of the FW Act by failing to comply with the Compliance Notice; and
(b)Mr Fuoco was involved in this contravention, pursuant to section 550(2) of the FW Act; and
(2)orders that:
(a)pursuant to section 545(1) of the FW Act, Ansa Finance take the steps that were required by the Compliance Notice by 3 May 2023; and
(b)pursuant to 547(2) of the FW Act, the respondents make a payment to the former employee Ms Malik, inclusive of interest, pursuant to the Compliance Notice.
As at the date of the penalty hearing, the respondents had not complied with the Court’s orders made on 5 April 2023. Nor have either of the respondents made an application to have the default judgment set aside.
The Court has also been informed, and I accept, that as at the date of this penalty hearing, the respondents had not complied with orders made in an earlier proceeding[3] which also related to non-compliance by Ansa Finance with a number of compliance notices.
[3] Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833
In the present case, in respect of the declared contraventions, the Ombudsman seeks aggregate penalties against each respondent in the range of 80% to 90% of the maximum available under section 539 of the FW Act. The Ombudsman contends that a penalty should be imposed against Ansa Finance in the range of $26,640.00 to $29,970.00 and against Mr Fuoco in the range of $5,280.00 to $5,940.00.
The Ombudsman’s application for the imposition of penalties came before the Court on 3 July 2023. The Ombudsman relied on a number of documents in support of its application, including:
(1)Application and Statement of Claim filed on 5 July 2022;
(2)affidavit of Barney Spencer Adams affirmed on 30 November 2022 (First Adams Affidavit);
(3)affidavit of Barney Spencer Adams affirmed on 30 November 2023 (Second Adams Affidavit);
(4)affidavit of Fair Work Inspector (FWI) Linda Tran affirmed on 29 May 2023 (Tran Affidavit); and
(5)the liability decision in an earlier matter involving the respondents, Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833 (First Ansa Finance liability judgment)[4].
[4] More recently, the Court ordered the payment of penalties for the contraventions found in the First Ansa Finance Liability judgment and published its reasons: see Fair Work Ombudsman v ANSA Finance Pty Ltd (No 2) [2024] FedCFamC2G 95
The Ombudsman also relied on its written outline of penalty submission filed on 30 May 2023. These submissions were further developed at the hearing by Mr Adams who appeared for the Ombudsman.
On the morning of the penalty hearing, the second respondent emailed my chambers attaching a medical certificate which stated he was suffering from a medical condition and would require time off work for the next three months. Accordingly, there was no appearance at the penalty hearing on behalf of the first or second respondent. For reasons explained later, the Court proceeded to hear the application.
BACKGROUND
The background to this application has been informed by the pleadings, the affidavits which have been filed by the Ombudsman and the Ombudsman’s written submissions.
The background advanced by the Ombudsman has not been contested in a substantive way. The respondents have been afforded an opportunity to contest this litigation, including being afforded an opportunity to file submissions and affidavit evidence on the question of penalty. Apart from filing an affidavit which purports to respond to the statement of claim, the respondents have chosen not to engage.
Ansa Finance was at all relevant times the operator of a finance broking business with a principal place of business located in Toorak, Victoria and registered offices in Hawthorn and Richmond at different times.
At all relevant times, Mr Fuoco was employed as the manager of Ansa Finance and was responsible for the operation and control of the business.
Employees of Ansa Finance were entitled to be paid wages and work in accordance with the terms contained in the Banking, Finance and Insurance Award 2020 (the Award).
According to the statement of claim filed by the Ombudsman, Ms Sonakshi Malik was employed by Ansa Finance on a full-time basis between 15 July 2021 and 30 November 2021 (the employment period). Ms Malik took personal leave from 21 September 2021 and resigned from her employment on 30 November 2021.
An application for assistance was received by the Ombudsman from Ms Malik in December 2021[5], not long after her resignation. That request prompted an investigation which was conducted by Fair Work Inspector (FWI) Tran between 24 and 29 January 2022.
[5] Not 2020 as deposed by FWI Tran at [6] of her affidavit
During her investigation, FWI Tran corresponded with Mr Fuoco. On 29 January 2022, FWI Tran received an email from Mr Fuoco in which, inter alia, he conceded that there was an underpayment in respect of Ms Malik that would need adjusting. He accepted that Ms Malik had not been paid annual leave on termination of her employment. Mr Fuoco also stated that he would gather information in order to assess the calculation of Ms Malik’s entitlements and would “present a proposal solution” in a week’s time[6]. Mr Fuoco also requested the Ombudsman to “forward me any material that FWO had in response to the Omnicron variant of CV-19 and its impact on SMEs”.
[6] Affidavit of FWI Tran affirmed on 29 May 2023, Annexure LTT-1
As a result of this correspondence and other information obtained during the course of her investigation, Ms Tran formed a reasonable belief that Ansa Finance had contravened:
(1)clause 15.1 of the Award; and
(2)sections 90(2) and 99 and the FW Act by failing to pay Ms Malik:
(a)the applicable minimum wage during the employment period;
(b)her accrued and untaken annual leave, and the annual leave loading when her employment ended; and
(c)her base rate of pay for her ordinary hours of work during periods of personal leave between 21 September 2021 and 30 November 2021.
On 4 February 2022, having formed a reasonable belief that Ansa Finance had contravened the FW Act and Award, FWI Tran issued Ansa Finance a compliance notice, which compelled the first respondent to take specific steps to remedy the various contraventions. The first respondent was required to take this specified action, including by making a payment to the employee of any underpayment by 7 March 2022 and to produce reasonable evidence of compliance to the Ombudsman by 14 March 2022.
On 4 February 2022, the Ombudsman emailed a copy of the Compliance Notice to Mr Fuoco and sent a copy of the Notice to the business’ Toorak address as well serving the then director of Ansa Finance, a Mr Dindo Verona, at the registered offices in Richmond and Hawthorn.
On 16 February 2022, FWI Tran emailed Mr Fuoco noting that calculations he alluded to in his January correspondence had not been received by the Ombudsman. In a response to that email, Mr Fuoco explained that he had been distracted by a family member with COVID-19. He also questioned why the Ombudsman believed it is “suitable to apply arbitrary time frames in the absence of consulting especially given have [sic] virulent Omnicron is?”[7].
[7] Affidavit of FWI Tran affirmed on 29 May 2023, Annexure LTT-4
During March 2022 further email correspondence was exchanged between Mr Fuoco and the Ombudsman’s office. Mr Fuoco raised concerns about the impact of the COVID-19 pandemic on the business and sought various accommodations from the Ombudsman, in terms of time for compliance and rectification of the underpayments. At Mr Fuoco’s request, the matter was escalated from FWI Tran to an assistant director of the Ombudsman, Mr Marsh. Mr Fuoco was subsequently informed that Ansa Finance had been provided with ample time and that the Ombudsman would press for compliance in accordance with its Compliance and Enforcement Policy.
On 5 April 2022 Mr Fuoco sent an email to the Ombudsman which sought to address each of the underpayments alleged in the Compliance Notice. In his email Mr Fuoco set out some estimates of the amounts he believed were outstanding and proposed a repayment plan of $500 per fortnight over a period of 17 fortnights.
The following day the Ombudsman informed Mr Fuoco that his calculations would be referred to FWI Tran when she was available, but reminded Mr Fuoco that Ansa Finance had failed to comply with the Compliance Notice and that payments to the former employee should commence immediately.
By reason of the admissions which the respondents are taken to have made by reason of the default judgment, Ansa Finance failed to take the specified action required by the Compliance Notice by 14 March 2022, or at all. Furthermore, Ansa Finance has failed to produce to the Ombudsman reasonable evidence of compliance with the Notice.
By reason of its failure to comply, the Ombudsman contends, and the Court has declared, that Ansa Finance contravened section 716(5) of the FW Act in respect of the Compliance Notice issued on 4 February 2022. The Court has also declared, based on the allegations contained in the statement of claim and the evidence provided to the Court at the time of the default hearing, that Mr Fuoco was relevantly involved in the company’s contravention and thus liable as an accessory pursuant to section 550(1).
LITIGATION BACKGROUND:
The Ombudsman commenced these proceedings on 5 July 2022.
On 3 August 2022, copies of the Ombudsman’s application and statement of claim were sent via post to Mr Fuoco, at the first respondent’s principal place of business in Toorak, and to the first respondent’s director, Mr Dindo Varona, at the business’ registered offices in Richmond and Hawthorn, as well as an Abbotsford address believed to have been occupied by Mr Varona.
On 17 August 2022, a process server was unable to effect personal service on the second respondent. Mr Fuoco is alleged to have said that he preferred documents to be emailed to him. When the process server explained that the documents were required to be personally served, Mr Fuoco replied with a text message stating that it was “not my problem”[8].
[8] Affidavit of Kathleen Ben Yair sworn on 17 August 2022, paragraph [3(e)]
The matter first came before me on 19 August 2022. On that occasion, Mr Adams appeared on behalf of the Ombudsman and Mr Fuoco appeared on behalf of the respondents. It is self-evident from that appearance that Mr Fuoco was aware of these proceedings.
On that occasion I made orders which deemed service of documents to be effective on the first and second respondents once documents had been emailed to specified email addresses. The respondents were ordered to file a notice of address for service and the matter was listed for a further direction hearing.
The matter came before the Court for a further Directions Hearing on 29 September 2022. Mr Adams appeared for the Ombudsman and Mr Fuoco appeared in person. I noted that Mr Fuoco was not a director or officeholder of the first respondent. Seeking to clarify the status of the company’s representation, Ansa Finance was directed to file an affidavit, by not later than 18 October 2022, confirming or otherwise its authority to be represented in the proceeding by Mr Fuoco. Both respondents were also ordered to file a response and any defence by 25 October 2022 and applicants were afforded an opportunity to file any reply (together the September Orders).
Default Judgment and Declaration
The respondents’ failed to file a response and defence as required by rule 4.03 of the Rules and comply with the September Orders.
On 30 November 2022, the Ombudsman filed an Application in a Proceeding (Default Application) seeking that default judgment be entered against the first and second respondent pursuant to rule 13.05(2)(d) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (the Rules).
On 6 December 2022, the Default Application was listed for a directions hearing. Mr Adams, solicitor for the Ombudsman and Mr Fuoco both appeared at the hearing. On that occasion, I afforded the respondents a further opportunity to comply with the September Orders. In a notation to the orders I made that day, I recorded that any further default or non-compliance with Court orders by the respondents would be relied on by the Ombudsman in their application for default judgment. The application for default judgment was otherwise adjourned until 9 February 2023.
On 20 December 2022 an affidavit was filed by Mr Fuoco which purported to respond to the various allegations contained in the Ombudsman’s statement of claim. The affidavit did not contain any material facts as such – rather it was a series of paragraphs which adopted the form of a pleading (admit/deny/do not know) referrable to paragraphs in the statement of claim.
The Ombudsman’s Default Application was listed for hearing at 10.15am on 9 February 2023.
At 10.09am that morning, Mr Fuoco emailed my chambers requesting to appear via video link due to sudden and unexpected carer responsibilities. I made arrangements for him to appear remotely. Mr Adams appeared for the Ombudsman.
After hearing the parties that morning, I ordered that Ansa Finance file a notice of address for service by a legal practitioner. The respondents were also ordered to file a response by 9 March 2023 to the Ombudsman’s application as required by rule 4.03 of the Rules. I set down a timetable for the parties to file any affidavit evidence and submissions they would seek to rely upon at the liability hearing. These orders also included a self-executing order, which provided that judgment would be entered for the Ombudsman against the respondents pursuant to rule 13.05 of the Rules in the event of default of the obligations imposed by the orders made that day.
On 3 March 2023 a notice of address for service was filed by a legal practitioner on behalf of the respondents. However, on 21 March 2023, the same practitioner filed a notice of intention to withdraw as lawyer for the respondents. The respondents did not file a response to the Ombudsman’s application by 9 March 2023.
Pursuant to liberty to apply the Ombudsman sought default judgment pursuant to the self-executing order. On 23 March 2023, upon reading the affidavit of Mr Barney Spencer Adams sworn 21 March 2023, I entered judgment for the Ombudsman against the first and second respondents due to their respective defaults, as defined by rule 13.04(2) of the Rules. The matter was listed for a directions hearing on 5 April 2023 to determine the further conduct of the matter.
At the directions hearing on 5 April 2023, Mr Adams again appeared on behalf of the Ombudsman but there was no appearance for or on behalf of the respondents. Being satisfied that the respondents had been informed of my earlier orders and that they were aware of the hearing and application for default judgment, I acceded to the Ombudsman’s request to make declarations that the first respondent contravened section 716(5) of the FW Act and that the second respondent was involved in that contravention within the meaning of section 550(2) of the FW Act. I also made orders requiring the respondents to take the steps required to comply with the Compliance Notice.
The matter was listed for a hearing in respect of the Ombudsman’s claim for the imposition of penalties, to take place on 3 July 2023. Orders were made for the respondents to file and serve any affidavits or outlines of submissions relating to penalty by no later 12 June 2023.
PENALTY HEARING
As mentioned, this matter was listed for a penalty hearing on 3 July 2023. I am satisfied that my 5 April 2023 orders and a notification from my chambers of the hearing date were known to the respondents. In an affidavit filed on 1 July 2023, the applicant’s solicitor, Mr Adams, deposed to numerous communications and attempted communications with the respondents. Based on that evidence, I am satisfied that the respondents were aware of the penalty hearing date and that they had been served all relevant documents including the Ombudsman’s outline of submissions and the various affidavits upon which the Ombudsman intended to rely.
My belief that the respondents were on notice of the hearing was also reinforced shortly before the hearing commenced. At 10:08am on 3 July 2023, just minutes before the penalty hearing was to convene, my chambers received an email from Mr Fuoco. The email simply read:
“Dear All,
Please find attached for your information.
Regards”
The email attached a medical certificate dated 3 July 2023. The medical certificate certified that Mr Fuoco had been examined that day and that in the opinion of the medical practitioner Mr Fuoco was suffering a medical condition in respect of which he will “likely require time off work in the next three months”.
The email was also sent to Mr Adams, although I subsequently learned that he was not aware of it until the Court drew it to his attention. This is entirely unsurprising as Mr Adams would have been in Court at the time the email was sent.
The email did not request an adjournment or that the Court consider any other procedural step in relation to the hearing. No application for an adjournment or other order has been filed. No other contact was made to my chambers or to the Court registry by Mr Fuoco. There was no attendance in Court by Mr Fuoco or any person seeking leave to represent Ansa Finance or Mr Fuoco. I asked my associate to call Ansa Finance and Mr Fuoco in the vicinity of the Court and there was no response to the call.
Mr Adams, on behalf of the Ombudsman, submitted that the penalty hearing should proceed to be heard in the absence of the respondents for the following reasons:
(1)the medical certificate attached to Mr Fuoco’s email was vague and non-specific. It stated that Mr Fuoco may be required to take time off work in the next three months, but it did not state that Mr Fuoco was currently incapacitated or unable to attend Court;
(2)the email to the Court did not request an adjournment or make any other application. The email was no more than a communication which attached a medical certificate “for your information”;
(3)if Mr Fuoco was suffering from any long-term medical condition which precluded his attendance at Court, there is no reason why he could not have brought this to the attention of the Ombudsman and its legal team at a much earlier date;
(4)as outlined in Mr Adams’ affidavit dated 30 June 2023, the Ombudsman and its solicitors had made numerous attempts to contact Mr Fuoco. There had been no response from Mr Fuoco to those attempts by telephone, text, email or otherwise;
(5)that it was open for the Court to infer that the email and medical certificate were a further instance of Mr Fuoco seeking to delay the proceeding, taking into account what the Ombudsman described as a long history of obfuscation and avoidance by the respondents; and
(6)the Ombudsman had been put to considerable inconvenience and cost to prepare for the penalty hearing and the resources of the Court had been made available to hear the penalty application. It was submitted that the provision of a vague medical certificate was not a sufficient basis to adjourn the matter.
After hearing the Ombudsman’s submissions, I determined that the application should proceed. In doing so, I noted that the respondents had not made any application for an adjournment and had not sought any other orders from the Court. The respondents had not made any arrangements for anyone to attend the Court to make representations on their behalf. I was satisfied that the respondents were on notice of the hearing, had been provided with all relevant documentation to enable them to prepare for the hearing, had not taken any step to comply with Court orders to file evidence or submissions prior to the hearing and had failed to respond to attempts by the Ombudsman and its solicitor to contact them.
Penalties sought by the Ombudsman
The Court has power pursuant to sub-section 546(1) of the FW Act to order that a person pay a pecuniary penalty where it is found that the person has contravened a civil remedy provision of the FW Act. Section 716(5) is a civil remedy provision pursuant the table set out in sub-section 539(2) of the FW Act.
A contravention of sub-section 716(5) attracts a maximum penalty of 30 penalty units. For breaches occurring between 1 July 2020 and 1 July 2023, the value of a penalty unit is $222[9]. The maximum penalty for contraventions of sub-section 716(5) is $6,660.00 for an individual and $33,300 for a corporate respondent[10].
[9] Crimes Act 2009 (Cth) s 4AA
[10] Pursuant to s 546(2) the maximum penalty for a corporation is 5 times the maximum prescribed in the table in s 539(2).
As mentioned in the introduction, the Ombudsman submits that a penalty should be imposed on each of the respondents in the range of 80 to 90% of the statutory maximum.
APPLICABLE LEGAL PRINCIPLES
Prior to writing this judgment I published reasons for ordering penalties against each of the respondents in Fair Work Ombudsman v Ansa Finance Pty Ltd (No 2) [2024] FedCFamC2G 95 (First Ansa Finance Penalty Decision). That case, like this one, involved an application by the Ombudsman for penalties in respect of the First Respondent’s failure to comply with compliance notices and Mr Fuoco’s involvement in the contravention.
I explained the Court’s approach to the assessment of penalties at some length in the First Ansa Finance Penalties Decision[11]. The approach of the Court to determining penalties is well-established and I do not intend to repeat myself, other than as necessary.
[11] Fair Work Ombudsman v Ansa Finance Pty Ltd (No 2) [2024] FedCFamC2G 95 at [27] to [31]
Suffice to say, I adopt the same approach here and I will be guided by the same principles and authorities. The guiding principle is that the object of civil penalties is the promotion of the public interest in compliance[12] through general and specific deterrence. A civil penalty must reflect deterrence, not punishment, retribution or rehabilitation. Any penalty should be proportionate in the sense that it recognises the objective seriousness of the contravention, it should deliver a sufficient sting so as not to be regarded as an acceptable cost of doing business and it should strike a balance between deterrence and oppressive severity.
[12] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
CONSIDERATIONS
In written and oral submissions, the Ombudsman took the Court to what it submitted were the most significant considerations relevant to assessing the quantum of penalty in this case. I am satisfied that the matters addressed below are substantiated on the evidence.
Quantum of loss
The Ombudsman submits that as early as 29 January 2022, even before the Compliance Notice was issued, Mr Fuoco had conceded that Ms Malik had been underpaid and was owed entitlements. Initially, Mr Fuoco estimated the company’s indebtedness to be in the order of $3,000 plus superannuation. However, he later conceded that the underpayment was in the order of $8,000 plus superannuation.
The respondents have not taken the steps required of them by the Compliance Notice. Ansa Finance has not performed the calculations necessary to quantify the underpayment, nor has it made a payment to Ms Malik. The Ombudsman submits that in circumstances where the employer has made an admission which acknowledges an underpayment and has made a representation as to the quantum of that underpayment, the Court can accept that the employee has suffered a financial loss. I am satisfied that any underpayment to Ms Malik has caused her loss.
The Ombudsman is content, for the purposes of determining penalty, for the Court to accept Mr Fuoco’s estimate of the quantum of the underpayment, notwithstanding that Ansa Finance has not provided any calculations to explain how it arrived at that estimate.
The Ombudsman also reminded the Court that the financial loss to the former employee does not represent the full extent of the loss consequential on the respondent’s non-compliance with the Compliance Notice. As I explained in the First Ansa Finance Penalties Decision, the damage caused by non-compliance includes, among other things, the erosion of public confidence in the statutory enforcement framework and the direct costs of unnecessary litigation.
Delay, obfuscation and lack of cooperation
The Ombudsman submitted that the respondents had engaged in a deliberate pattern of conduct which was aimed at frustrating the investigation process and Court proceedings, including by subjecting the Ombudsman to cost and inconvenience and the Court to wasted resources, all with a view to avoiding or delaying the inevitable consequence of its contravention.
The Ombudsman pointed to numerous communications between Mr Fuoco and FWI Tran, including demands by Mr Fuoco that the investigation be referred to a higher level of management within the Ombudsman. It was submitted that Mr Fuoco sought the involvement of more senior management as a means of delaying the investigation and in the hope that the respondents’ non-compliance would meet with a different result. The Ombudsman points to the fact that Ms Tran’s supervisor, Mr Marsh, simply reinforced and reiterated the Ombudsman’s position.
The Ombudsman also referred to the respondents’ “on-again-off-again” participation in the Court proceedings. The respondents have consented to orders for the filing of documents but then failed to comply. The respondents have attended some directions hearings but not others. At one point the respondents were legally represented, albeit very briefly, and subsequently the respondents were not.
The Ombudsman says that when viewed in totality, the respondents have sought to give the appearance of cooperation but never had any intention of doing so.
For example, the Ombudsman also points to Mr Fuoco’s offer to rectify the contravention by making repayments in instalments. The Ombudsman noted that Mr Fuoco’s offer was conditional on the Ombudsman agreeing to withdraw the proceedings and that when the Ombudsman refused to do so, Mr Fuoco took no further action to make repayments. It is submitted that the refusal to rectify the contravention without a quid pro quo deal from the Ombudsman shows the respondents’ lack of appreciation of the broader public policy considerations inherent in enforcement proceedings.
The Ombudsman submits that the established pattern of obfuscation, delay and feigned cooperation, not only disentitles the respondents to a discount for mitigation, but should be seen as aggravating conduct which warrants particular sanction. The Ombudsman submits that when viewed as a whole, taking into account the respondents’ failure to comply with Court orders in this proceeding and their ongoing failure to comply with Court orders to rectify contraventions in related court proceedings, there is a compelling case for general and, in particular, specific deterrence.
Citing my recent penalty decision in Fair Work Ombudsman v C &G Smith Enterprises [2023] FedCFamC2G 523 (C & G Smith Enterprises), the Ombudsman accepts that the gravity of the underlying contravention cannot be made more objectively serious by reason of the subsequent conduct of the respondents. However, the Ombudsman submits that conduct subsequent to a contravention is evidence which goes to the relevant issues of contrition, cooperation and rectification.
It is submitted that the respondents have shown a flagrant and blatant disregard for the Ombudsman’s compliance scheme and Court orders in this proceeding. The Ombudsman submits that the respondents have engaged in a deliberate course of counter-productive conduct which is far worse than if the respondents had put their head in the sand and done nothing at all. The Ombudsman argues that the respondents’ approach to these proceedings has caused the Ombudsman to incur significant cost and for the Court to waste precious resources, as evidenced by the number of directions hearings necessary to bring the matter to finality.
I agree with the Ombudsman’s submission that if the respondents had done nothing at all, this proceeding probably would have been concluded months ago. I accept that when viewed as a whole, the respondents have not cooperated with the regulator and have not sought to mitigate the cost and inconvenience to the Ombudsman or the Court. There is no conduct which warrants a discount.
However, I do not want it thought that any push back by a respondent or any conduct which results in delay should be regarded as evidence of belligerence or a disregard for the authority of the regulator. There may, for example, be circumstances where it is quite proper for a respondent to have queries about a compliance notice or for a respondent to seek to have an issue escalated to a higher level of management at the Ombudsman. Every case must be judged on its merit.
Relevance of prior similar conduct and enforcement proceedings
I note that the complaint by Ms Malik was made after the commencement of the earlier proceedings which related to the respondents’ failure to comply with compliance notices arising from underpayments to four other employees (see First Ansa Finance liability judgment).
Accordingly, the Ombudsman submits, and I agree, that when the Compliance Notice was issued in respect of Ms Malik, the respondents were clearly on notice about the probable consequences of any failure to comply. It can have come as no surprise to the respondents that a failure to comply would likely result in the Ombudsman initiating contravention proceedings in respect of which it would seek relief including declarations and penalties. The respondents’ non-compliance with the notice must be seen in that light.
The Ombudsman also emphasised that the failure to comply with the Compliance Notice should be regarded as an ongoing contravention, not a point in time contravention. The non-compliance continues, the loss to the employee has compounded and the respondents should be seen as not having learnt anything from their exposure to other enforcement proceedings.
Deterrence – general and specific
In light of all the available evidence and information, the question for the Court is what needs to be done to deter the respondents’ from further contravening the relevant legislative scheme.
In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, the High Court made clear that in assessing penalty, the Court may have regard to both the character of the contravention and also of the contravenor itself. Accordingly, while the objective seriousness of the contravention is a factor to be taken into account, so too are the characteristics and behaviour of the contravener in its conduct leading to and subsequent to the contravention.
I accept the Ombudsman’s submission that, when viewed in its totality, the evidence in this case leads to the conclusion that the respondents are unlikely to acknowledge and comply with the legislative scheme without the imposition of a serious and meaningful penalty. The penalty should be sufficiently serious to send a clear signal to other like-minded employers that the type of conduct engaged in by the respondents is unacceptable.
The legislative scheme provides an avenue for an employer to seek administrative review of a compliance notice. There are means available for an employer who is dissatisfied with the notice to have it reviewed independently. Is also to be noted that even where a compliance notice has been issued, the Ombudsman will not usually issue legal proceedings without first affording the respondents ample opportunity to comply, such was the case here.
There are also opportunities for a respondent employer to compromise those proceedings by negotiation with the Ombudsman or by taking other steps to demonstrate cooperation, contrition or regret. Sadly, the respondents have not meaningfully pursued any of these options.
At the time the respondents failed to comply with the Compliance Notice, the respondents were subject to other enforcement and penalty proceedings which had been commenced by the Ombudsman. I mentioned earlier that is a matter I take into account in terms of measuring the seriousness of the offending conduct.
For the purposes of assessing the penalty in this case, I do not consider it appropriate to regard the respondents as having a record of prior offending. At the time the Compliance Notice which is the subject of these proceedings was issued, I had not yet determined liability in the earlier proceedings nor had I made declarations or orders for the imposition of penalties.
That said, my liability reasons in the earlier matter were handed down on 14 October 2022. These proceedings had then been on foot for about three months. With the benefit of my reasons in the earlier liability judgment, it should then have been apparent to the respondents that their ongoing failure to comply with the Malik Compliance Notice had a high likelihood of leading to another similar finding. Notwithstanding, there is no evidence of the respondents having taken any steps to help themselves, leading to the inevitable consequence of default judgment and this application for penalties.
In the earlier penalty judgment I decided to exercise my discretion to group four contraventions of section 716(5). As I mentioned in the penalty judgment, that was a very fine call and the respondents might consider themselves fortunate that I did so. I am not prepared to view this most recent contravention as part of the earlier course of conduct.
Other relevant considerations
In the First Ansa Finance Penalty Decision I addressed matters pertaining to the size of the first respondent’s business and the respondents’ misplaced reliance on the impact of the COVID-19 pandemic as an excuse for non-compliance.
I note that Ansa Finance appears to have qualified for government support during the pandemic, but that does not authorise the company to treat compliance with workplace laws less seriously. I find no evidence to support a lesser penalty than the contravention otherwise merits.
DISPOSITION
I regard the respondents’ contravention in this proceeding as serious. There is no evidence of remorse, contrition or cooperation. The respondents’ conduct has occasioned loss to the former employee, Ms Malik, and has imposed unnecessary cost and inconvenience upon the Ombudsman and the Court. The conduct is deserving of a significant penalty to achieve the objective of deterrence.
I am required to impose a penalty which is not unreasonably harsh or crushing. However, despite having been extended the opportunity to do so, the respondents have not filed any affidavit evidence or made any submissions about their respective financial circumstances.
Taking all matters into account, I believe a penalty of 75% of the maximum is appropriate for each of the respondents for the established contravention of section 716(5) of the FW Act. In dollar terms, this means that the first respondent, Ansa Finance, should pay a penalty of $24,975 and the second respondent, Mr Fuoco, a penalty of $4,995.
The penalties so ordered should be paid within 28 days of the date of this judgment. The payments should be directed to the consolidated revenue of the Commonwealth.
I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes. Associate:
Dated: 27 February 2024
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